JJB Sports' shares soar as it reveals talks with 'potential US partner'
The market value of JJB Sports surged by more than a half yesterday after the embattled chain said it was in talks with a "potential strategic partner" that is understood to be a US sports equipment giant.
Dick's Sporting Goods, which has nearly 500 shops in the US, is thought to be in negotiations with JJB about acquiring a minority stake, which would provide it with funds to help safeguard its medium-term future.
The crisis-stricken retailer, which narrowly avoided administration in 2009 and last year, had responded to a spike in its shares earlier yesterday amid speculation it was in possible takeover talks. JJB said it had "held discussions with its lending bank and a number of potential strategic partners and investors about raising additional financing for the company"".
The retailer, whose chief executive is Keith Jones, added: "Constructive discussions continue with the company's lending bank and one of the potential strategic partners and have been widened to include other key stakeholders." JJB partly needs fresh funds for its store refurbishment programme, which is progressing very slowly, to improve its trading.
Its current talks over additional funds come despite JJB's battered shareholders ploughing £196m into the Aim-listed retailer via three fundraisings since October 2009.
Dick's Sporting Goods was founded by 18-year-old Dick Stack in 1948. The Pittsburgh, Pennsylvania-based company delivered net income of $263.9m for the year to 28 January, on sales of $5.21bn.
Before Dick's interest emerged last night, potential takeover speculation had centred on JD Sports Fashion, which walked away from a possible takeover bid for JJB in March 2011. JD declined to comment last night.
The market leader Sports Direct said yesterday it had not had any discussions with JJB, as a "strategic partner" or otherwise.
JJB posted a 5.7 per cent fall in like-for-like sales for the five weeks to 29 January. While this represented an improvement on its earlier trading performance, JJB is still on track for a full-year loss of up to £60m.
Shares in JJB rose by 5.75p, or 56.1 per cent, to 16p yesterday.
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